Southwest Rapid Rewards awards more points per dollar on expensive fare types than on cheaper fares. And redeeming points for expensive fare types costs more points per dollar than cheaper fares. It isn’t just a revenue-based system, it’s a logarithmic revenue-based system.
In theory a revenue-based program shouldn’t need to devalue. More expensive tickets automatically cost more points. As ticket prices rise so do award prices. And the scarcest seats already cost more in Southwest’s system not just because of their higher cash price but because the value per point redeeming for those points is reduced. Yet they’ve devalued multiple times anyway.
Could we be seeing an increase in the value of points?
Normally Southwest charges 72 to 80 points per dollar of base fare when redeeming an award. The original redemption rate before devaluations was 60 points per dollar, and we haven’t seen that in about four years.
However nsx reports that there are certain flights currently pricing at just 60 points per dollar again.
Tonight I booked some flights which were attractively priced in points, 2330 and 2379 points. Then I went to book a flight for cash. I discovered that the 2330 SFO-LAX flights priced out at $49 as normal but the 2379 OAK-LAX flights (a points price I’ve never encountered before) were pricing at $57. Checking the fare basis, 2379 is a 60 points per base fare dollar conversion ratio.
Folks, we have not seen 60 points per dollar since the early years of the points program.
..I surmise that flights very early and very late in the day in some markets are being offered at 60 points per dollar. I found them for LAX-OAK but not for LAX-SFO. Currently SFO has lower fares than OAK, so that makes some sense.
Here’s a search for Los Angeles – Oakland with fares at $57 one-way.
These flights cost 2886 points.
The last flight of the day is also $57 one-way.
It costs just 2379 points.
A $57 ticket equates to a $40 base fare.
2886 is the standard 72 points per dollar in base fare. 2379 points equates to 60 points per dollar in base fare.
Note of course that the pricing of Southwest reward tickets is based on a number of points per dollar of base fare, and on award tickets you do not pay the 7.5% federal excise tax, passenger facility charges, and segment taxes. So the ‘savings’ you get, and value per point, compared to the cost of a paid ticket is greater.
60 points per dollar is a 17% discount off the ‘standard’ 72 points per dollar pricing.